The strategic development of resource stocks and their effects on firm performance was tested in small firms. Specifically, analysis was made of the impact on performance of strategic planning mechanisms (mission statements and strategic plans) and the differential impact of the types of resources available for development (tangible and intangible). Examination was also made of the performance effects of investments in non-professional versus managerial and professional workers. Results show that flexible, short-term strategic planning positively influences firm performance. But, the greatest effect was identified in investments in managerial and professional employees, especially those investments aimed at selection (through unstructured interviews) and later training (after the first year of employment). Our findings underscore the unique management challenges of small firms. They face a critical reliance on establishing and maintaining informal methods of control and communication while undertaking sensitive investments in resources under conditions of scarcity. Our results point to clear patterns of management and investment in top-performing small firms, and should interest researchers aiming to extend our understanding of small-firm resource development and practitioners attempting to make often difficult resource management decisions.
|Number of pages||20|
|Journal||Academy of Entrepreneurship Journal|
|Publication status||Published - 2005|